Schaeffer's Trading Floor Blog

Options Check-Up: Biogen Idec Inc, Outerwall Inc, and AT&T Inc.

Analyzing recent option activity on BIIB, OUTR, and T

by 8/22/2014 7:43 AM
Stocks quoted in this article:

Among the stocks attracting attention from options traders lately are biotechnology firm Biogen Idec Inc (NASDAQ:BIIB), kiosk concern Outerwall Inc (NASDAQ:OUTR), and telecom titan AT&T Inc. (NYSE:T). Below, we'll break down how option buyers are positioning themselves, and how much speculators are willing to pay for their bets on BIIB, OUTR, and T.

  • Put buyers have been active on BIIB recently, despite the stock's proven technical tenacity. In fact, shares are up roughly 60% year-over-year, yet BIIB's 10-day International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) put/call volume ratio of 1.30 ranks in the bearishly skewed 88th percentile of its annual range. Given the equity's impressive gains, a portion of this put buying could be a result of shareholders protecting paper profits. Regardless, those purchasing BIIB's front-month options are able to do so at a relative bargain -- the stock's Schaeffer's Volatility Index (SVI) of 25% ranks lower than 87% of comparable readings taken in the past 12 months. On Thursday, Biogen Idec Inc closed at $338.65.

  • OUTR has rallied 12% month-to-date to trade at $61.66, thanks to a lift from its 10-day moving average. The stock is still sitting in the red on a year-to-date basis, though, and option traders are expecting the equity to resume its longer-term downtrend. At the ISE, CBOE, and PHLX, OUTR's 10-day put/call volume ratio of 8.42 ranks in the 92nd annual percentile, meaning puts have been bought to open over calls with more rapidity just 8% of the time within the past year. Front-month Outerwall Inc options are pricing in extremely low volatility expectations at the moment, as evidenced by the stock's SVI of 28%, which arrives lower than 97% of similar readings taken in the previous 52 weeks.

  • T has spent the past two weeks churning in a tight range between $34.20 and $35, and on Thursday, the stock settled right in the middle, at $34.64. Against this tepid technical backdrop, the equity has racked up a 10-day ISE/CBOE/PHLX put/call volume ratio of 3.81, which ranks just 6 percentage points from a bearish peak. At present, premium on AT&T Inc.'s front-month options is relatively inexpensive, per the equity's SVI of 12%, which ranks in the 12th percentile of its annual range.

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